Fasiglifam (TAK-875) a G-protein coupled receptor 40 (GPR40) agonist, significantly improves hyperglycemia without hypoglycemia and weight gain, the major side effects of conventional anti-diabetics. Unfortunately, during multi-center Phase 3 clinical trials, unexpected liver toxicity resulted in premature termination of its development. Here, we investigated whether TAK-875 directly inflicts toxicity on hepatocytes and explored its underlying mechanism of toxicity. TAK-875 decreased viability of 2D and 3D cultures of HepG2, a human hepatocarcinoma cell line, in concentration- (>50 μM) and time-dependent manners, both of which corresponded with ROS generation. An antioxidant, N-acetylcysteine, attenuated TAK-875-mediated hepatotoxicity, which confirmed the role of ROS generation. Of note, knockdown of GPR40 using siRNA abolished the hepatotoxicity of TAK-875 and attenuated ROS generation. In contrast, TAK-875 induced no cytotoxicity in fibroblasts up to 500 μM. Supporting the hepatotoxic potential of TAK-875, exposure to TAK-875 resulted in increased mortality of zebrafish larvae at 25 μM. Histopathological examination of zebrafish exposed to TAK-875 revealed severe hepatotoxicity as manifested by degenerated hypertrophic hepatocytes with cytoplasmic vacuolation and acentric nuclei, confirming that TAK-875 may induce direct hepatotoxicity and that ROS generation may be involved in a GPR40-dependent manner.